The dollar rose marginally from a 15-year low against a basket of currencies on Friday, as investors debated whether the U.S. currency's decline has gone too far, too fast.

The dollar index, which measures the U.S. currency against six other major currencies, is on track for its third straight week of declines even with Friday's mild gains. Uncertainty about the outlook for U.S. interest rates and economic growth and problems with credit markets has weighed on the dollar..

The Federal Reserve's decision on Tuesday to cut key U.S. interest rates by an aggressive half percentage point eroded the dollar's value further, and analysts said the currency was due for a pullback.

The fact the dollar has come down so quickly and sharply leads you to expect a brief relief rally, said Andrew Bekoff, chief investment strategist at Printz Capital Management in Philadelphia. But the trend is still lower for the dollar.

The euro was up 0.1 percent at $1.4086, after weaker-than-expected euro zone manufacturing data for September dragged the currency from a record high of $1.4120 hit overnight, according to Reuters data.

The dollar fell to a fresh 15-year low at 78.398, against a basket of currencies but recovered to 78.593, up marginally on the day. The index is down 1.3 percent for the week.

The euro was stronger versus a broadly weaker yen, trading 0.8 percent higher at 162.64.

Data showed on Friday that euro zone private sector growth slowed to a two-year low in September as new orders plunged, making any further interest rate hike this year by the European Central Bank unlikely.

The figures provide clear evidence that turmoil which has seen stock and foreign exchange markets swinging wildly and the ECB pumping temporary funds into money markets to alleviate soaring rates has affected the real economy.

Euro zone PMI was quite weak today and that has weighed on the euro, said Vincent Chaigneau, head of foreign exchange and fixed income strategy at Societe Generale in London.

But I think that the market is getting too ambitious about rate cuts by the Fed. I think we may see the dollar come back but it's still too early to make that call, he added.

Still, a half-percentage-point cut in the overnight federal funds target rate to 4.75 percent has tarnished the allure of dollar-denominated assets. Analysts see this trend continuing given expectations that the Fed may cut rates again this year.

ECB policy-makers have kept up generally hawkish rhetoric in contrast to the United States, where further rate cuts are expected.

The U.S. dollar fell to C$0.9939 against the Canadian dollar, its weakest in 31 years, having breached parity on Thursday for the first time since 1976. The greenback last traded at C$1.0001, down 0.1 percent on the day.

Traders cautioned though that bets that the Canadian dollar could strengthen further could run into trouble.

Currencies should reflect a country's economic fundamentals, said Brian Taylor, senior currency trader at M&T Bank in New York. The loonie is purely a commodity play and if anything happens to the world economy, Canada will be among the first to be whacked.

The dollar gained against the yen as traders felt comfortable putting risky carry trades back on the table, which involve selling the Japanese currency for higher-yielding units. Analysts said the Fed rate cut took some of the sting from the impact of credit problems on the U.S. economy.

People think it's OK to take on risk because of what the Fed has done and continue on with carry trade, said Taylor.

The dollar rose 0.7 percent against the yen to 115.46.

(Additional reporting by Gertrude Chavez-Dreyfuss in London)